The happiest time of the year? How to avoid Christmas debt

 A guest post from the fabulous debt advice charity Debt Advice Foundation on How to avoid Christmas debt

Most of us go into complete financial denial in the run–up to Christmas. 

Calls to debt advisers melt away like snow on an un-insulated roof as people decide that, despite all their money worries, they simply have to have piles of presents under the tree and cupboards bulging with food treats.

We forget the rising bills, the loan repayments, and the fact that the car insurance is due in January and the washing machine is on its last legs. 

We convince ourselves that the special offers in the run up to Christmas are unmissable and that we’ll cut back on spending in January to pay for it.

Overspending at Christmas causes severe debt problems for many, many people.  They spend up to their limit on credit and store cards, take out an overdraft or fall prey to the payday loans companies with sky-high interest rates.

And the main reason it happens is because they won’t talk to their family about money. 

How many parents ever sit down and talk to their children about how much life actually costs?  How many families sit round the table together and work out how much they can afford to spend on Christmas? 

Money management classes in primary schools show that younger children really can understand about budgeting, about which bills are priorities and about the difference between things we need and things we want.

But the instinct of most parents with limited income is to try to shield their children from what they often see as a failure on their part.  And this reaches its peak in the weeks before Christmas.

The happiest time of the year, How to avoid Christmas debt

So if you really want to avoid overspending this Christmas, try this before you do anything else:

·         Sit down with a cup of tea and work out how much you need to spend each month on day to day living.  That’s things like your rent or mortgage, council tax, heating and light, food, the cost of getting to work, insurances and loan repayments. 

·         Take all of that expenditure away from your monthly household income, to see how much you have left over at the end of the month for non-essentials.

·         Then add up all the non-essential things you already spend money on each month such as subscriptions, social outings, downloads, takeaways… Now see what you actually have left at the end of the month.

·         Then call a family council.  It could just be you and your children, or you could include grandparents if they are close by and share Christmas with you.

·         Together you can decide how much you can afford, where you can save money, what you really want to do and what presents people would really like to have.

·         See if together you can think of different ways of affording things:

–          a Christmas present could be a promise of a treat that you can save up for;

–          if a teenager wants a new phone, perhaps you’ll agree to pay half the monthly payment if (and when) they get a Saturday job to pay the rest;

–          parents and grandparents could join budgets together to buy something the children want;

–          be creative – make vouchers for things the children will appreciate, like an extra hour on their bedtime or an increase in their pocket money;

–          think about things that family members will want later in the year – new summer sports kit, for instance.


This way everyone can agree just how much you are going to spend on Christmas.

Every family is different and the answers to keeping Christmas spending under control will be different too.  But being open with your family, writing down the budget and working out a plan together is one way of promising yourself the best present of all – a debt-free New Year.

If you are struggling with your debts, contact a free, independent debt advice charity such as Debt Advice Foundation.  Their helpline is 0800 043 40 50, and it’s open 8am-8pm Mon-Fri and 9am-5pm on Saturdays.  Or go to


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